The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court
MEMORANDUM DECISION AND ORDER
The Court has before it competing Motions to Appoint Lead Plaintiffs and Appoint Counsel. For the reasons stated below the Court GRANTS the motion of the Institutional Investors and DENIES all other motions. The Court names the Institutional Investors the presumptive lead plaintiffs in this action.
This case is a securities class action suit against Hecla Mining Company, et al. ("Hecla"). The plaintiffs allege that during the class period, Hecla issued materially false and misleading statements regarding the company's business, and that those false statements caused artificially inflated prices for Hecla's securities. On January 11, 2012, Hecla announced that one of their major mines would close for a year, significantly reducing the company's silver production for 2012. Once Hecla's allegedly misleading statements came to light with this announcement, its stock prices dropped $1.23 per share. This was a one-day decline of 21%.
A number of parties filed motions to consolidate the two largely identical cases against Hecla and to claim lead plaintiff status in the class action. The Court granted the motions to consolidate on April 17, 2012. At this time only five motions to appoint lead plaintiff remain pending:
1. Jeffrey A. Farkas and David G. Ray (collectively, the "Hecla Investor Group") claim a loss of $696,138 (FIFO) or $376,250 (LIFO); they propose the Faruqi Firm as counsel;
2. LRI Invest S.A. and City of Atlanta General Employees' Pension Fund (collectively, "Institutional Investors") claim $1,303,554 (FIFO) or $1,195,643 (LIFO); they propose Motley Rice as lead counsel, Gordon Law Offices as liaison;
3. Carpenters Pension Fund of West Virginia ("West Virginia") claims a $17,143 loss; it proposes Robbins Geller as lead counsel, Gordon Law Offices as liaison;
4. Cambria County Employees' Retirement System, Peter M. Quist, and David W. Quist (here referred to collectively as "Cambria and Quist") claim a loss of $1,710,428; they propose Kessler Topaz Meltzer & Check as lead counsel, Banducci Woodard Schwartzman as liaison; and
5. James R. Holton and Michael Schneider ("Holton and Schneider") claim losses of $914,479; they propose the Pomerantz firm as lead counsel, Cosho firm as liaison.*fn1
The modern standard for selecting the lead plaintiff in securities class actions comes from the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which is found in 15 U.S.C. § 78u-4(a). According to the statute, the plaintiff who filed the action have 20 days to publish notice of the action, advising members of the purported plaintiff class that "not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class." 15 U.S.C. § 78u-4(a)(3)(A)(i).
Upon hearing responses to the notice, the Court appoints as lead plaintiff "the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members." 15 U.S.C. § 78u-4(a)(3)(B)(i). The Court does this by adopting a presumption that the most adequate plaintiff is the person or group of persons that: (1) has either filed the complaint or made a motion in response to a proper notice; (2) according to the court has the largest financial interest in the relief sought by the class; and (3) otherwise satisfies the requirements of Rule 23. 15 U.S.C. 78u-4(a)(3)(B)(iii)(I).
Once the presumption is established by the Court, it may be rebutted only upon proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff either (1) will not fairly and adequately protect the interests of the class; or (2) is subject to unique defenses that render such plaintiff incapable of adequately representing the class. 15 U.S.C. 78u-4(a)(3)(B)(iii)(II). The most adequate plaintiff selects and retains counsel to represent the class, subject to approval by the court. 15 U.S.C. 78u-4(a)(3)(B)(v).
In In re Cavanaugh, 306 F.3d 726 at 729 (9th Cir. 2002), the Ninth Circuit explained that the statute creates a three-step process. The first step is to publicize the pending action, claims, and class period. Id. This step also includes a Court's decision regarding consolidation of multiple actions if necessary, since the PSLRA dictates that this determination precedes selection of a lead plaintiff. 15 U.S.C. 78u-4(a)(3)(B)(ii).
The second step is for the Court to appoint a presumptive lead plaintiff. Cavanaugh, at 729-30. To do this, "the district court must compare the financial stakes of the various plaintiffs and determine ...